Q&A with…Zach Schiller

Catalyst Cleveland - August 4, 2005

Catalyst Cleveland

by Stephanie Klupinski

Ohio Secretary of State Kenneth Blackwell recently postponed plans to put a TEL, or Tax Expenditure Limitation, on a statewide ballot this fall. If approved, the proposal would restrict spending by state and political subdivisions to either 3.5 percent or the sum of theannual rates of consumer inflation and population growth, whichever is more. Blackwell, candidate for governor in 2006 and spokesman for the TEL, says he plans to put it on next November’s ballot. This fall, voters in Colorado where the first TEL law passed in 1992 will decide whether to start allowing government to spend surplusrevenue. A bipartisan group, including Colorado’s Republican governor, supports the proposal. Meanwhile, TEL ideas are catching on in more than 20 states, where activists are working to enact similar legislation. Catalyst Associate Editor Stephanie Klupinski talked with Zach Schiller about Policy Matters Ohio’s recent analysis of the proposed amendment.

The Policy Matters Ohio report suggests that, if approved, this proposed amendment would lead to a reduction in state funding for public education. Why?This amendment, if it passes, will override [every]thing else in the Ohio Constitution. …What is clear is that this limitation will become overriding state policy over everything that the state considers important or constitutionally has protected. People involved ineducation are familiar with the clause in the [state] Constitution which talks about “thorough and efficient system of public schools.” …That right will take second place to [this] constitutional amendment. …So anyone who harbors hopes down the line that we will see a better system of school funding has to be very skeptical that that will come about. …This proposal would have a major effect on state and local spending. It would reduce the amount.

But the TEL formula does allow for increases in spending, right?The economy grows not just by population plus inflation, it also grows by productivity. …This proposal does not acknowledge the possibility that as living standards increase, government maintains its share of that growing economy. So over time, [the formula] does not capture growth. You are going to see an inevitable shrinkage in the role of government in the economy, which is the goal of the proponents.

How much shrinkage are you talking about?If this proposal had been enacted in Ohio and had gone into effect in 1995, a [Center on Budget and Policy Priorities] study looked at what would have happened. It found that by 2003, Ohio’s spending at the state level would have to have been cut by $2.7 billion a year, or roughly one-sixth of the overall spending by the general revenue fund. …What it meant for K-12 education was a cut of roughly $900 million a year, [which] you could accomplish by laying off 15,000 teachers or reducing the school year by 12 days. The point is that this is not something that would have a salutary effect on oureducation system.

Can voters elect to override the caps?Overriding the cap will prove to be very difficult. It looks like it will have to be done annually. You even could have a school district passing a bond levy for a particular budget and then finding later on that it can’t spend the money because …at that time, the spending, including the bonds, would rise above the cap [and] every localschool district will have its own cap of 3.5 percent or population plus inflation. Or if it’s going to be over [that amount], they will have to have voter approval to spend the money, even though they’ve already voted to collect the levy or the bonds.

Proponents argue that TEL laws provide transparency in fiscal decisions and help limit the growth of government and wasteful spending. Is the upside that this could lead to more efficient spending?There’s nothing in the proposal that requires greater efficiency. It’s just a meat ax. …Nothing in the proposal helps identify inefficiency or waste or tax loopholes. …The very people who it is taking the authority away from, the elected officials, it’s going to be those same people’s decision what the spending is. While it may act as if itwill generate greater efficiency, there is no particular reason that it will.